Stock Markets Are at Record Highs Around the World: From New York to London to Tokyo, if there’s one similarity among the world’s equity stock markets,
it’s this: record highs.
Fourteen of the world’s 20 largest stock markets have recently reached all-time highs.
Contents
Global Stocks Pullback
Major Equity Markets
Europe’s Corporate Earnings Outperformance
European Stock Index
Commodities Supporting Stock Prices
Record Highs
The MSCI ACWI Index tracks developed and emerging markets and reached a new high last Friday.
In the United States, the S&P 500 and Nasdaq 100 indexes hit record highs this week,
while the Dow Jones Industrial Average surpassed 40,000 points for the first time.
Meanwhile, the largest stock exchanges in Europe, Canada, Brazil, India, Japan, and Australia, are currently at or near their peak values.
Supporting Conditions
Imminent interest rate cuts, strong economies, and corporate earnings drive this activity.
Additionally, there are many potential drivers to keep the rally going, such as $6 trillion in money market funds, with risks remaining scarce.
Salman Ahmed, global head of macro and strategic asset allocation at Fidelity International, said,
“From a macro perspective, there are no red signals.”
He recommends buying global equities in his multi-asset portfolios, adding,
“The cyclical picture remains strong, and the rally is broadening out.”
Global Stocks Pullback
The pullback in global stocks in April was short-lived, as buyers consistently appeared at lower prices.
This helps explain why the S&P 500 hasn’t seen a 2% drop in 311 days, its longest streak since 2017-2018.
Even Chinese equities, which have been struggling since reaching their peak in February 2021, are starting to recover.
Major Equity Markets
The S&P 500 has set 24 new all-time highs in 2024 after two years of stagnation,
as US stocks have added $12 trillion in market value since late October.
Part of this is due to hopes for a soft landing with the economy staying strong while inflation cools,
spurring bets that the Federal Reserve will ease monetary policy later this year.
Enthusiasm for AI Technology
Another part is enthusiasm for AI technology. AI chip giant Nvidia alone is responsible for
about a quarter of the S&P 500’s gains. Along with contributions from Microsoft, Amazon, Meta, and Alphabet,
these five companies account for 53% of the index’s rise.
Dow Jones Achievement
Dave Mazza, CEO of Roundhill Investments, noted that the new milestone for the Dow Jones this week
is the more significant development since it is less influenced by the big tech behemoths.
He said, “While the tech sector’s strength has been incredibly important in driving markets to record highs,
it’s not the only sector doing well.” He added, “While some pointed to the
market being too concentrated last year, you can’t say the same in 2024.”
Europe’s Corporate Earnings Outperformance
European stocks are also hitting record highs, supported by economic data showing signs of bottoming amid positive surprises this year.
This boosts corporate profits and drives higher market expectations.
BNP Paribas strategists led by Georges Debbas said,
“The expected sluggish earnings season turned out to be better than feared,”
Notably, three-quarters of European companies met or exceeded earnings expectations,
with margins improving. This boosts analysts’ estimates for future profits, lifting stocks higher.
European Stock Index
The pan-European Stoxx 600 Index has risen in five of the last six months,
with the divergence in monetary policy from the US likely to support the region’s equities.
The European Central Bank has taken a more dovish tone than the Federal Reserve in recent months,
and bond markets expect the ECB to cut rates before its US counterpart for the first time.
Commodities Supporting Stock Prices
The UK’s FTSE 100 Index has outperformed the Euro Stoxx 50 in dollar terms over the past three months,
recovering much of its underperformance from the beginning of the year.
Soaring commodity prices have been a key driver, helping one of the cheapest developed equity markets in the world start to catch up to its rivals.
The economically sensitive commodities sector has also pushed Canada’s main stock benchmark,
the S&P/TSX Composite Index, to an all-time high.
Gold and copper have repeatedly set records this year,
boosting the country’s massive mining sector, which accounts for over 12% of the index’s weighting.
In a note, Bloomberg Intelligence analysts Gillian Wolff and Gina Martin Adams wrote,
“Precious metal prices are closing in on decade highs set just a few weeks ago,
which could keep the Canadian index supported for now, though a reversal could spell trouble.”
Japan’s Return
Japan’s Nikkei 225 is up 16% this year, adding to a 28% gain last year.
The country lured investors and drove gains through a campaign to improve shareholder returns,
a weak yen, and the end of negative rates in Japan.
BlackRock Inc. Strategists said the sliding yen could put off foreign investors.
However, they also think the outlook is good over the long term due to corporate reforms, domestic investments, and wage growth.
Meanwhile, Australia’s S&P/ASX 200 Index hit a high on March 28 after inflation data
bolstered bets that rates have peaked.
Since then, expectations have shifted,
with a former central bank official predicting that cuts may only come in late 2025.
Yet, Australian stocks are back to hovering near that record high.
Stock Markets Are at Record Highs Around the World